Pay Anyone With Cash — Even When They’re Miles Away

Square changed the game for small businesses by letting anyone easily take credit cards. Now PayNearMe founder and CEO Danny Shader says he’s doing the same for cash. Wait, what?

The whole point of cash is that it’s the raw unit of legal tender. There’s no mediating, no processing. Cash would seem the form of payment least in need of technological intervention. Cash in hand equals money in your pocket.

Yet in a 21st-century U.S. economy driven by digital transactions, relying on cash alone cuts you out of the mainstream. According to a federal survey released last fall, more than 8 percent of U.S. households qualify as unbanked. That means 17 million adults without checking or savings accounts. For them, the cash economy is the economy. Another 24 million households qualified as underbanked, meaning someone in the house had a bank account but within the past year had also used non-bank “alternative financial services” such as payday loans or check-cashing.

Photo: PayNearMe

But cash doesn’t work well for many kinds of payments, Shader says. Rent. Loan payments. Online purchases. Basically money destined for anyone you can’t just walk down the street and hand it to. Shader says his company bridges that physical divide by making paying anyone with cash as easy as going to 7-Eleven.

Here’s how it works: Say you’re a tenant in an apartment complex run by a property management company based in another city or another state. Handing over a wad of bills isn’t an option. If that property manager is signed up, you can go to the PayNearMe website, find yourself in the tenant database, and get a barcode (printed on paper or sent to your smartphone). Take that barcode to 7-Eleven, get it scanned and pay the cashier your rent in cash. You’re done.

“The transaction runs at the speed of buying a Slurpee,” Shader says.

A veteran tech entrepreneur who has sold companies to Amazon and Motorola, Shader started working on PayNearMe just under four years ago. Until now, PayNearMe has worked directly with larger businesses, including Greyhound and Amazon. (In California, you can also apparently use PayNearMe to fund your account with Xpressbet, a site that lets you wager on horse-racing online.)

Starting today, small and medium-sized businesses can set up an account directly through the PayNearMe website to start taking remote cash payments themselves. The account costs $199, and consumers pay $3.99 per payment.

PayNearMe’s backers clearly see the cash economy as a moneymaking opportunity. The company just booked $10 million in its latest round of financing, led by August Capital. Shader pitches the service as a boon to the unbanked and underbanked, a major chunk of the U.S. population on the financial margins. But he also says the ability to take cash without the headaches of physically handling it has advantages for those on the receiving end: “Cash,” Shader says, “doesn’t bounce.”